Rules, Reputation and Macroeconomic Policy CoordinationIn this book David Currie and Paul Levine address a broad range of issues concerning the design and conduct of macroeconomic policy in open economies. Adopting neo-Keynesian models for which monetary and fiscal policy have short-term real effects, they analyse active stabilisation policies in both a single- and multi-country context. Questions addressed include: the merits of simple policy rules, policy design in the face of uncertainty and international policy coordination. A central feature of the book is the treatment of credibility and the effect of a policy-maker's reputation for sticking to announced policies. These considerations are integrated with coordination issues to produce a unique synthesis. The volume develops optimal control methods and dynamic game theory to handle relationships between governments and a conscious rational private sector and produces a unified, coherent approach to the subject. This book will be of interest to students and teachers of open economy macroeconomics and to professional economists interested in using macroeconomic models to design policy. |
Other editions - View all
Rules, Reputation and Macroeconomic Policy Coordination David Currie,Paul Levine No preview available - 2009 |
Common terms and phrases
aggregate demand analysis assume B₁ Barro and Gordon behaviour cent certainty equivalence chapter consider cooperative policy cooperative reputational covariance matrix CR-OPT CR-SIM credibility Currie and Levine demand shock deterministic discount discretionary dynamic effects equations exchange-rate feedback rule fiscal policy forecasting full optimal rule given government spending incentive to renege inconsistency inflation rate initial displacement initial optimal rule instruments LBS model Levine and Currie linear long-run loss function macroeconomic macroeconomic policy matrix Minilink minimise monetary policy Nash equilibrium NCNR nominal income non-reputational policies optimal policy optimisation outcome output P₁ parameter policy coordination policy design policy rules policy-maker precommitment private sector rational expectations rational expectations model real exchange rate real interest rates regime reputational policies saddle-path simple rules solution stabilisation stabilisation policy stochastic supply shock sustainability Table target time-consistent policy time-consistent rule two-country values W₁ welfare loss function